Star Fund Managers of the Past 10 Years

We reveal the 10 top performing fund managers of the past decade, how they fared after they reached the top and whether a star turn one year affected fund flows the next

Karen Kwok 10 March, 2016 | 4:34PM
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There are thousands of fund managers in the market, making it difficult for investors to choose between them. Although past performance is no guarantee of future returns it is worth noting who has been solid enough to deliver outstanding performance throughout the global financial crisis.

Using data from Morningstar Direct, we reveal the 10 top performing fund managers of the past decade – and how they fared after they reached the top. From 2006 to 2015, two managers reached the dizzying heights of star manager twice. We present the best performer in each individual year, how he or she performed and how investors reacted to their star turn.

2006: Robin Geffen

Neptune Russia & Greater Russia Fund had made a 56.7% total return in 2006, ranking it the top performer of the year among all funds. The now Bronze Rated fund also outperformed the MSCI Russia Large Cap Index by 20.3% in 2006. A year after the outstanding performance inflows of the fund had jumped significantly from £30 million in 2006 to £100 million in 2007. In 2008, the fund recorded the largest inflow in a decade with £219 million. Severe volatility since 2006 means the fund has delivered an annualised return of 0.5% over the past decade, although there have been periods of significant outperformance during the period.

The fund manager Robin Geffen’s wealth of experience in Russian equities and his strong long-term track record continue to fuel confidence in the fund, Morningstar analyst Lena Tsymbaluk says.

Geffen has historically preferred Russia’s domestically oriented sectors, Tsymbaluk adds. Geffen positions the fund in areas he believes are most likely to perform based on the research carried out by the internal analysts. The team conduct country-based reviews, examining a nation’s economy, social, political, and capital market features. These reviews highlight which countries have attractive prospects and collectively help them to judge the current position of the global economy.

2007: Charlie Awdry

In 2007, Henderson China Opportunities Fund delivered its best performance in a decade with a 71.2% gain. The Bronze Rated fund beat its MSCI China NR USD benchmark by 7.8% in the year, positioning it the best performer among all funds. However, investors’ reactions were not in line with the fund’s top performance. In 2008, investors sold more than £35 million of the fund, presenting a massive contrast to inflows of £236 million in 2007. The struggle was fuelled by investors’ ignorance to earnings growth surprises and preferring the safety of more defensive sectors in 2008, Morningstar analyst Simon Dorricott said.

The fund has outperformed the category average since the fund manager Charlie Awdry took control in 2006, Dorricott said. Awdry has accumulated a wealth of experience covering China equities over the past decade. Morningstar analysts have a positive rating to the fund manager. However, returns from the fund have been variable over time, reflecting the aggressive relative positioning and structural bias away from large, state-owned enterprises.

The fund’s inflows had jumped to £84 million in 2009, but the fund has continued losing money since then.

2008: Chris Taylor

Neptune Japan Opportunities Fund strongly outperformed its MSCI Japan NR JPY index by 86.3% in 2008. The fund made a 84.8% return, performing way better than its peers throughout the financial crisis. The fund therefore saw inflows of more than £59 million in 2009. Yet it was not comparable to 2014 that recorded the largest inflow of the fund in ten years with £168 million, following gains of 51% in 2013.

The fund was popular throughout the decade however it did see outflows of £3 million in 2007 and £17 million in 2012. The fund has been managed by Chris Taylor since 2005.

2009: Robin Geffen

Geffen once again won the title the year’s star manager in 2009, with Neptune Russia & Greater Russia Fund gaining a 116% return in 2009. The fund had also outperformed the index by 34.2%. Investors kept buying the fund in the first half of the decade- from 2006 to 2011, the total inflows of the fund were up to £500 million. However, from 2012 to 2015, the fund lost a total of £226 million in outflows.

The significant underexposure to energy was a costly decision in 2011, while the domestically oriented positioning contributed positively in 2013, Morningstar analyst Tsymbaluk said. In 2014, the fund lost 47%, underperforming both the index and peers.

However the fund manager has remaited a strong long-term track record. Since its inception in December 2004 to December 31 2015, it has produced an annualised return of 5.9%, beating the MSCI Russia Large Cap Index and the Russia equity Morningstar Category average by 2.8 and 1.3 percentage points per year, respectively.

2010: SF Peterhouse Smaller Companies Gold

SF Peterhouse Smaller Companies Gold Fund strongly outperformed the index by 90% in 2010. The fund delivered a 127.9% return. The fund saw minor inflows of £8 million the following year. However, investors have sold out of the fund since 2012. Until 2015, the fund recorded total net outflows of £6.2 million. The fund has been managed by Peter Webb or Webb Capital since 2012.

A majority of the fund’s core investment portfolio seek to invest in the companies engaged in the mining of gold. The fund invests more than a half of its portfolio in equities on the market of the London Stock Exchange.

2011: Hideo Shiozumi

Legg Mason IF Japan Equity Fund topped the performance chart in 2011 with a 27.1% return and beat its comparable index by 30.2%. Despite the exceptional performance among its peers, investors sold more than £5 million of the fund in 2012. Years after saw the fund gained money, with 2013 the strongest year on record with inflows of £140 million as Japanese equities came back into favour with investors. Hideo Shiozumi has been the fund manager since 1996.

2012: Edward Legget

Standard Life Investments UK Equity Unconstrained Retail Fund was the top performer in 2012 with a 44.3% return, surpassing its FTSE All Share index by 31.8%. Edward Legget has managed the fund since 2008 and put 2012’s strong performance down to his exposure to small and mid-sized companies. In 2013, the fund recorded the largest inflows in a decade with £245 million. However in 2015, it became unpopular among investors with outflows of £84 million.

2013: Linden Thomson

AXA Framlington Biotech Fund produced a 63.7% return in 2013, ranking it the top performer among all funds. The fund only underperformed its benchmark by a very small margin of 0.9%. In 2014, following such considerable gains, the fund recorded inflows of £129 million. Investors bought more of the biotech fund in 2015 with inflows of £161 million. The fund was unpopular among investors during the credit crisis but it started gaining money in 2012.

Linden Thomson has managed the fund since 2012, and the fund has proved a strong track record since then.

2014: Sashi Reddy and David Gait

Stewart Investors Indian Subcontinent Fund was the best performer in 2014 with a 62% return. The now Bronze Rated fund also outperformed the index by 20.9%. However, rather than chase these gains investors fled the fund  to the tune of £13 million outflows in 2015. The fund was popular in the five years to 2010, recording record inflows of £210 million that year. Since 2012, the fund had lost in a total of £127 million.

Returns have been particularly impressive under the tenure of co-managers Sashi Reddy and David Gait, Morningstar analyst Mark Laidlaw says.

Over the period from July 2009 until the end of November 2015, the strategy enjoyed an annualised return of 17.53%. This compares to 6.22% for MSCI India index and 8.50% for the India Equity Morningstar Category average over the same period. Results are even more impressive on a risk-adjusted basis, reflecting the team’s ability to deliver in virtually all market conditions, especially when markets are falling.

Laidlaw warns that the fund is too risky to play more than a niche role in a broader portfolio for Europe- and UK-based investors, but it may play a larger role for Asia-based investors.

2015: Hideo Shiozumi

Star manager of the year in 2011, Hideo Shiozumi topped the best performance chart again in 2015. Under Shiozumi’s management, the Legg Mason IF Japan Equity Fund made a 49.4% return in 2015, and it outperformed its index by 27.4%. The fund recorded inflows of £83 million last year but saw outflows of more than £9 million in January this year during the considerable market volatility.

The information contained within is for educational and informational purposes ONLY. It is not intended nor should it be considered an invitation or inducement to buy or sell a security or securities noted within nor should it be viewed as a communication intended to persuade or incite you to buy or sell security or securities noted within. Any commentary provided is the opinion of the author and should not be considered a personalised recommendation. The information contained within should not be a person's sole basis for making an investment decision. Please contact your financial professional before making an investment decision.

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Karen Kwok

Karen Kwok  is a Reporter for Morningstar.co.uk